India: Ferrous scrap prices drop by INR 400/t w-o-w in Chennai on weak steel demand- 5 Jun

• Interest in imported scrap remains limited
  
  
• Rebar prices decrease by INR 1,300/t w-o-w
  
  

According to BigMints latest assessment, HMS (80:20) scrap prices in Chennai declined by INR 400/t w-o-w to INR 32,000/t, while remaining stable on a daily basis. In the semi-finished segment, billet prices remained unchanged d-o-d at INR 40,900/t, although they recorded a weekly decline of INR 400/t, reflecting softer market sentiment.

Similarly, in the finished steel segment, rebar prices witnessed a sharp correction of INR 1,300/t w-o-w to INR 46,200/t, while remaining stable d-o-d. The broad-based decline in steel prices highlights weak demand conditions and cautious buying sentiment in the Chennai market.

Imported and domestic price trends

Market participants reported that Australia-origin shredded scrap was offered at $395-400/t CFR Chennai, while HMS (80:20) was quoted at $365-370/t CFR. Despite the ongoing shortage of scrap in the domestic market, buying interest for imported material remained limited.

Sources indicated that buyers were bidding nearly $15-25/t below prevailing offer levels, reflecting cautious sentiment. Additionally, domestic scrap remains more economically viable compared to imported material, discouraging fresh bookings and limiting import trade activity in the Chennai market.

In the domestic market, HMS (80:20) scrap prices were quoted at INR 31,500-32,000/t for immediate payment deals, while extended credit-term transactions were concluded at INR 32,000-32,500/t.

Overall, trading activity remained largely within the INR 31,500-32,500/t range, reflecting balanced supply-demand dynamics despite weaker sentiment in the downstream steel sector. Variations in deal prices were mainly attributed to payment terms and mill-specific volume requirements. Market participants continued to maintain a cautious and requirement-based procurement strategy amid soft steel demand.

Buyer-supplier sentiments

According to a mill source, billet demand remains sluggish amid weak finished steel demand in the market. Despite production cuts and lower operating rates of around 60-70%, inventory levels continue to rise, with mills currently holding nearly 15-20 days of stock. Weak offtake in the finished steel segment has continued to pressure producers, limiting material movement.

Meanwhile, mills are still facing higher conversion costs, as rebar demand remains subdued. On the raw material side, scrap supply continues to remain disrupted, while imported scrap is still not economically viable at prevailing offer levels, adding further pressure on production economics.

A source indicated that HMS (80:20) scrap prices are currently hovering between INR 31,500-32,500/t, depending on payment terms and procurement volumes. Despite slow scrap availability at mills, weak demand in the finished steel segment has pressured mills to seek lower procurement prices in order to maintain conversion economics and operating margins.

Additionally, higher imported scrap offer levels continue to discourage fresh bookings, as elevated landed costs have reduced the viability of overseas purchases. The combined impact of subdued finished steel demand, tight domestic scrap supply, and expensive imported material is creating operational challenges for steelmakers, influencing production planning and keeping overall market sentiment cautious.

Regional comparison

In the western India based Jalna market, HMS (80:20) scrap and rebar prices remained stable at INR 33,500/t and INR 45,500/t, respectively, while billet prices declined by INR 100/t to INR 40,900/t.

According to market sources, major mills in the region have already initiated production cuts due to weak finished steel demand, which continues to pressure overall market sentiment. Meanwhile, scrap supply at mills remains at moderate levels, helping mills manage raw material requirements amid subdued steel consumption.

Outlook

The Chennai scrap market is expected to remain range-bound in the near term, as weak finished steel and billet demand continue to pressure market sentiment. However, moderate scrap availability and limited viability of imported scrap due to higher landed costs may restrict any sharp downside in prices. Mills are likely to continue need-based procurement while closely monitoring conversion costs. Price movements are expected to remain within INR +/- 200-500/t.